How insurance carriers are making money off of employer sponsored health plans

Hello, Dr. Keith Smith you on behalf of the Free Market Medical Association (FMMA), thank you for joining me.

I have here a copy of a contract that the large insurance carriers signed with an employer group, a contract they have signed with many employer groups all over the U.S. In this contract, it is very clear that this insurance company, which is providing services for a self-funded health plan, is free to deduct one amount and remit to those who provided the care a much lower amount and the difference is undisclosed to the employer health plan.

Let me give you an example to make what I’m saying very clear. Let’s say the Surgery Center of Oklahoma sends a bill and we are paid $1000. $1000 is not what came from the employer sponsored health plan. It easily could have been $2000, but the carrier in the middle kept the difference and this amount remains undisclosed to the employer and their health plan from which this deduction was taken.

So, this contract clearly states that the insurance carrier can take that money and then if they can negotiate a better deal, keep the difference and not disclose that difference to the employer health plan.

This is an obvious violation of the fiduciary duty that the employer has, to their employees. In Michigan and California there are many lawsuits where employers, having signed agreements like this and having violated the fiduciary relationship they have with their own health plan, are in trouble with their employees. The only recourse the employers have is to sue big insurance carriers for presenting with these contracts in the first place.

The FMMA provides the wonderful opportunity for the providers of medical care facilities and physicians to talk directly with the employer groups who are being fleeced. Part of the reason that the FMMA has been so successful is that employer groups understand that they can talk directly to providers of care and negotiate better deals without the intermediaries fleecing them all along the way.

I wanted to present to you this concept of fiduciary duty, its violation and how these contracts provide a role in fleecing employers.